Costs coming down on contentious affordable housing project in Portland

PORTLAND, Maine — Dale McCormick said Thursday she is confident stakeholders can rein in costs for a proposed affordable housing project in Portland which has become a lightning rod for recent criticisms by state treasurer Bruce Poliquin.

The Maine State Housing Authority executive director also defended the organization’s track record of fiscal responsibility in the face of what she said are inaccuracies being spread by the treasurer.

The Elm Terrace project at 66-68 High St., which seeks to renovate a historic building owned by the University of Southern Maine to include affordable housing units, has come under intense public scrutiny as a prime example of what Poliquin has described as irresponsible use of tax money.

In an online post Thursday, Poliquin railed against the project and said he plans to seek answers on what he called “unacceptable” development costs when the Maine State Housing Authority board next meets Tuesday morning.

As treasurer, Poliquin sits on the board. The authority, commonly referred to as MaineHousing, in 2010 accepted the Portland Elm Terrace project as one of few to receive some of the state’s limited low-income housing tax credit funding. Over the past year, per-unit cost estimates for Elm Terrace skyrocketed from an initially proposed figure of $243,000 to $314,000.

“How can Maine taxpayers be expected to help pay for $314,000 ‘low-income’ apartments when the median single-family home sells for $159,000?” Poliquin wrote in his online post, echoing past criticisms of the project delivered to the media. “Why should our fellow Mainers be asked to subsidize housing which they themselves cannot afford to live in?

“Doing good doesn’t mean doing it at any cost,” the treasurer continued. “Building, say, $100,000 instead of $300,000 affordable housing units would help three times as many low-income Mainers. Public officials at all levels of government are fiduciaries of hard-earned taxpayer dollars. Everyone should be held accountable.”

On Thursday, McCormick responded to the latest salvo from Poliquin.

“We have provided Bruce with the facts, which are very different than what he writes about in his blog,” McCormick told the Bangor Daily News. “He’s portrayed MaineHousing as saying ‘yes’ [to the Elm Terrace costs] when we said ‘no.’ He keeps saying this even though we’ve corrected him. It seems like he has a preconceived notion of how MaineHousing does business, and the facts don’t seem to influence him.”

McCormick said the agency stood firm when presented with escalating costs for Elm Terrace, which was initially proposed as an $8.5 million project by developer Community Housing of Maine, but eventually climbed as high as $10.9 million.

“We were working with [the developers] and found they had missed some important details, like asbestos in the building and soil remediation that needed to be done,” McCormick said. “So the project grew. But it wasn’t until Aug. 31 of this year that we got the final tab of that growth. A week later, we said, ‘no.’

“It hasn’t been approved at that cost and never was,” she continued. “There was no contract. It’s too expensive per unit. We have been working with the developer to lower the per-unit cost to acceptable levels. It’s a very nice project. It’s important to Portland, and we want to get to ‘yes.’ So we’ve been working with the developer to lower the cost.”

McCormick said she told Community Housing of Maine the per-unit cost needed to come down to $265,000 before MaineHousing considers giving the project final approval, and she said that in spite of the public scrutiny, all stakeholders are making significant progress toward that goal number.

She acknowledged that even $265,000 per unit is a figure that might raise eyebrows, but said Poliquin is oversimplifying the situation when he compares multiple-unit, low-income housing projects to single-family homes.

“I do understand people getting sticker shock when [Poliquin] says you can build a single family home for $125,000 to $150,000, [then asks us] ‘Why does it take you $190,000 per unit to build a multi-family unit,’ which is our average cost,” McCormick said.

The MaineHousing head said the projects backed by her agency must meet stricter safety requirements and ADA compliance — ensuring accessibility to handicapped residents — and are often being built on more expensive downtown lots to provide access to services needed by the facilities’ occupants. She also noted that in the case of Elm Terrace, where MaineHousing would contribute $148,000 per unit if the project is ultimately deemed acceptable, developers are saddled with the additional costs of rehabilitating a historic structure.

“A single-family house that you’ll build for $125,000 or $150,000 might not a sprinkler system and probably doesn’t have an elevator,” McCormick said.

The crossfire over Elm Terrace comes in the wake of news that MaineHousing will be the subject of an investigation by the state Legislature’s Office of Program Evaluation and Government Accountability. McCormick has said she welcomes the review and, speaking to the Bangor Daily News Thursday, listed a number of cost controls the agency has implemented since her arrival in 2005.

Among them were creating incentives for the inclusion of nonsmoking units — which lower administrative costs in a project — as well as stricter caps on developer costs and the relaxing of a previously standing requirement that at least 30 percent of the units in a project be three-bedroom units. That figure was lowered to 20 percent.

Calls placed to Poliquin and Community Housing of Maine were not immediately returned.